Dockworker talks continue; shippers worry about surcharges

Wednesday, October 10, 2012

As talks between U.S. East and Gulf coast longshoremen and their employers continue, shipper groups continue to express concern about surcharges that carriers have said they may impose if there is a labor disruption.
In September, the International Longshoremen’s Association and U.S. Maritime Alliance (USMX) said they would continue to bargain for an additional 90 days with the aid of mediators from the Federal Mediation and Conciliation Service (FMCS) to negotiate a new contract to replace the one that expired on Sept. 30.
Those talks are continuing with both sides honoring an information media blackout requested by the FMCS as neither the ILA or USMX would answer queries about where or how frequently they are meeting.
Meanwhile, on the West Coast, the International Longshore and Warehouse Union Local 63 Office Clerical Unit (OCU) and the Los Angeles/Long Beach Harbor Association said in a brief statement they “have continued discussions, and have set a bargaining schedule that extends into next week.”
Local 63 OCU members, who work for ship agencies and terminal companies, have been working without a contract for two years. The union has met sporadically with management to work out a new contract in recent months.

Friedmann

Peter Friedmann, executive director of the Agricultural Transportation Coalition (AgTC), said his members continue to have concerns about announcements made by many carriers in August and early September that they might impose $800 to $1,000 surcharges on containerized cargo moving to North American ports if the lack of a contract led to a shutdown of East and Gulf coast ports and cargo rerouting.
AgTC expressed several concerns about the surcharges, including:

The fact that many of them were nearly identical.

Their vague language as filed with the Federal Maritime Commission do not commit the carriers to refrain from imposing surcharges if a settlement is reached.

Lack of consultation with shippers.

Possibility that shippers might be hit with both surcharges and force majeur declarations in the event of a strike.

“Where did the $1,000 come from, how exactly did they calculate that, and don’t they talk to their customers beforehand?” Friedmann asked. “This is a mutual concern to both the carrier and the shipper, what is happening with uncertainty in the ports… Everybody was caught by surprise with these announcements.”
He said his members are in a difficult position to know how to price their products and face a significant dilemma with their sales.
“You are selling your product with a delivered price. How are you going to quote it? Are you going to quote it with $1,000 in there or not? Your job depends on it. If you quote it with the $1,000, you don’t get the business. If you sell it and they do impose $1,000 you have lost all the profit on it and you have cut into the muscle and lost money on the sale, in which case you get fired. What do you do?” he said.
Friedmann said his group has had informal discussions with the FMC about the surcharges.
In September, the FMC received numerous informal inquiries in relation to the surcharges, and said “unless done pursuant to a waiver or exemption, any tariff rule (including surcharges) of a common carrier that results in an increased cost to a shipper may not be effective earlier than 30 days after publication.”
The agency added that “a common carrier tariff rule that purports to have effect only at the time the cargo is unloaded does not alter the requirement of the Shipping Act and the commission’s regulations that rules applicable to any given shipment shall be those in effect on the date the cargo is received by the common carrier or its agent. Cargo received by the carrier prior to publication or effectiveness of a new tariff surcharge would not be subject to such charge."
The Oakland, Calif.-based tariff publishing firm Distribution Publications Inc. (DPI) said in the October issue of its newsletter Signals that "ocean carriers and NVOCCs who filed port congestion surcharges in their FMC tariffs in anticipation of a strike have begun amending their tariffs to postpone the effective dates of these surcharges.
"Because FMC regulations require that NVOCCs and ocean carriers file new surcharges in their FMC tariffs 30 days prior to the surcharge effective date, we expect most carriers to postpone their port congestion surcharges to December 30, 2012 to ensure these surcharges are in place in the event a new labor agreement is not reached by the contract end date of December 29, 2012," DPI said.

Gatti

Peter Gatti, executive vice president of the National Industrial Transportation League, said he's seeking clarification on the issue of whether tariffs need to be refiled.
Both Gatti and Friedmann said they do not expect to hear much as the ILA labor negotiations continue.
“Less publicity is more productive… It is perfectly normal, reasonable, and in fact encouraging,” Friedmann said. “If people come out and start blasting each other in press releases, then that would be counterproductive.”
Gatti said interest by shippers in the negotiations will increase "once the deadline starts ticking down toward the end of December. But right now, for our guys, it is business as usual.” - Chris Dupin